February 08, 2013

Lawyers Debate Meaning of 'Abstract' in Federal Circuit Patent Case

A full panel of
the U.S. Court of Appeals for the Federal Circuit heard oral arguments Friday
in a case to determine the patent eligibility of a computer-assisted financial
transaction method.

The case pits CLS
Bank International, the largest multi-currency cash settlement system for the
foreign exchange market, versus Alice Corp., the patent holder of a
"computerized trading platform for exchange obligations."

A panel of
Federal Circuit judges validated the patents in a 2-1 ruling in July. In
October, the Federal Circuit granted an en banc review.

In arguing for
CLS, Gibson, Dunn & Crutcher partner Mark Perry told the en banc panel of
10 judges that "these patents claim only abstract ideas," and that
"reciting an abstract idea is not a sufficient claim."

Judge Pauline
Newman questioned Perry on the definition of abstract. He responded by saying
that it's something that can be done "entirely in the human mind or made
with pen and paper." Using a computer to accelerate this process does not
make the method unique, it simply accelerates the process. "In this
context, a computer is a neutral," Perry said.

Nathan Kelley,
the deputy solicitor for the U.S. Patent and Trademark Office, supported
Perry's claims.

"We reject
the notion that a general purpose computer and software would never be eligible
for a patent," Kelley told the judges. "Adding a general purpose to
an abstract idea is not a claim."

Williams &
Connolly partner Adam Perlman argued on behalf of Alice Corp. He told the
judges that the claim was valid because it did not restrict other forms of
payment transaction, simply one that was superior.

"We have a
computer that requires specialized programming," Perlman argued.
"That creates a new machine."

Judge Timothy Dyk
asked Perlman if there was another way to perform the transaction that met the
international requirements, and that did not infringe upon the patent.

"I don't know the answer to your
question," Perlman said. "We have claimed one particular way to
exchange obligations. Nothing that we do in our claim prohibits others from
doing it another way."

For more background on the case, check out this recent National Law Journal article.

Comments

Well, a new program on a computer does not make it a 'new machine'. Maybe the software is patentable, but someone could make up a similar program , out of their head, and there you go, as Perry said, it's just a process from the mind and speeding it up with a machine does not make it novel.